The government on Monday fully exempted service tax on certain taxable services provided to a goods transport agency (GTA) by sub-contractors.
A notification to this effect was issued by the Revenue Department, according to a Finance Ministry statement here.
Evidently, the exemption is aimed at ending the ongoing nationwide strike by truckers as the continuation of the agitation may lead to supply side constraints and a consequent hike in prices of various commodities.
These services provided by sub-contractors, the statement says, are generally used by GTAs during the course of transport of goods. The specified services which have been fully exempted from service tax are clearing and forwarding agent service; manpower recruitment or supply; cargo handling; storage and warehousing; business auxiliary service; packaging activity; business support; and supply of tangible goods.
The statement notes that the tax on transportation of goods by road is on the gross amount of freight charges (after allowing abatement of 75 per cent) which includes the expenditure incurred on these services.
Since no credit is available to GTA services, separately charging tax on these input services leads to double taxation, which would be mitigated now, the statement said.